Caesars Mediation Continues, With Warning From Judge

July 11,2016 22:10

In the dispute over Caesars Entertainment Operating Co.'s $18 billion restructuring, one side is making a “big miscalculation,” according to the judge overseeing the chapter 11 case. Told Monday in court that mediation in CEOC's disputed restructuring ...

WILMINGTON, Del. â€” Caesars Entertainment Corp. and Caesars Acquisition Co. have amended their proposed merger agreement, which is intertwined with the $18 billion bankruptcy of the casino companyâ€™s main operating unit, the companies said on Monday.The operating unit, Caesars Entertainment Operating Co. Inc., or CEOC, received approval from a U.S. Bankruptcy judge last month to begin seeking votes from creditors on its plan to restructure its debt and exit bankruptcy.The bankruptcy plan would slash $10 billion of debt and split the CEOC unit into a new operating company and a real estate investment trust.Caesars Entertainment is contributing billions of dollars of cash and equity to CEOC and that will help repay CEOCâ€™s creditors.Some of that cash will be generated by merging Caesars Entertainment with Caesars Acquisition. The merger was originally proposed in December 2014.Under the amended terms, Caesars Acquisition shareholders will receive 27 percent of the merged entity. Under the original proposal, they would have received 38 percent, according to regulatory filings.Among other assets, Caesars Acquisition owns Planet Hollywood and The Linq Hotel in Las Vegas and Harrahâ€™s New Orleans, which were acquired from the CEOC operating unit before its bankruptcy.The Caesars Entertainment parent has said those acquisitions were done at fair value to relieve the CEOC unit of capital intensive projects.CEOCâ€™s junior creditors, led by Appaloosa Management, said those deals stripped billions of dollars of the best assets from the operating unit, leaving it bankrupt.The junior creditors remain the biggest hold-outs in the CEOC bankruptcy and have said they have as much as $12 billion in claims against Caesars Entertainment and its private equity backers, Apollo Global Management and TPG Capital.Time is of the essence as a temporary halt on lawsuits against the Caesars Entertainment parent by junior bondholders expires in August. Caesars Entertainment has said that court rulings in favor of the bondholders could threaten its contribution to the reorganization plan and plunge it into bankruptcy alongside CEOC.A confirmation hearing on CEOCâ€™s bankruptcy exit plan will begin on Jan. 17, two years after the company filed for Chapter 11 protection.